Feds in talks about vacating 500,000 square feet of office space

The federal government is refusing to go into details regarding discussions with a landlord about vacating 500,000 square feet of office space in the National Capital Region, a move that would impact the area’s already climbing vacancy rate.

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The federal department responsible for handling much of the government’s office needs, Public Works, has been looking to shed space in recent years as the governing Conservatives reduce the number of government workers.

“While PWGSC has not sent any formal notices to private sector landlords, there has been a preliminary discussion with a landlord of the possibility of our vacating 500,000 square feet of space,” wrote Pierre-Alain Bujold, a spokesman for Public Works, in an e-mail.

“At this time, as a final decision has not been made, it would be premature to identify the location.”

Mr. Bujold said it’s standard practice for the government to let landlords know that they intend to vacate, renew or start an acquisition process for new space before a lease comes to an end.

Which building the federal government is looking at vacating remains a mystery. Public Works officials declined to respond to questions about where the office space is located and when the lease is set to expire.

However it’s clear that a decision to move federal employees out of 500,000 square feet of space would create even more competition among landlords that are already desperate for high-quality tenants.

That amount of space represents about 1.3 per cent of the total inventory in the Ottawa region, which according to the most recent market report from Cushman & Wakefield Ottawa is 37,971,916 square feet.

News of the negotiations also comes at a time when the amount of unleased space in the city has been increasing.

Ottawa had a vacancy rate of 7.9 per cent during the third quarter of 2013, according to the Cushman report. That’s a jump of nearly two percentage points from 6.0 per cent in the same period last year.